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All right, I see it's the top of the hour. For those of you just joining us, welcome to today's webinar, Form 1099-K Third Party Payment Network Transaction. We're glad you're joining us today.

My name is Michael Smith and I'm the Senior Stakeholder Liaison with the Internal Revenue Service, and I'll be your moderator for today's webinar, which is slated for approximately 60 minutes.

Before we begin, if there is anyone in the audience that is with the media, please send an email to the address on this slide and be sure to include your contact information and the news publication that you're with. We have our Media Relations and Stakeholder Liaison staff are ready to assist you and answer any questions you may have. As a reminder, this webinar will be recorded and posted to the IRS Video Portal in a few weeks. The portal is located at www.irsvideos.gov. Now one thing please note, continuing education credits or certificates of completion are not offered if you view any version of our webinar after this live broadcast. Again, we hope you won't experience any technology issues, but if you do, this slide shows some helpful tips and reminders.

We've posted a technical help document you can download from the materials section on the left side of your screen. It provides the minimum system requirements for viewing this webinar along with some best practices and quick solutions. If you've completed and passed your system check, but you're still having problems, try one of the following options. Number one, close the screen where you're viewing the webinar and simply relaunch it. And two, click on settings on your browser viewing screen and select HLS. You should have received today's PowerPoint in a reminder email, but if not, no worries, you can download it by clicking on the materials dropdown arrow on the left side of your screen, and you can see that on this slide. You can also download the resource document on our Annual Filing Season Program from that materials dropdown arrow as well.

Close captioning is available for today's presentation. So, if you're having trouble hearing the audio through your computer speakers, please click the closed captioning dropdown arrow located on the left side of your screen, and this feature will be available throughout the webinar. If you have a topic specific question today, please submit it to us by clicking the Ask Question dropdown arrow to reveal the text box. We will be answering those questions later in the webinar, so please do feel free to add those in throughout the webinar at any time. Simply type your question in the text box and then click Send. Now very important note here, please do not enter any sensitive information or taxpayer specific information, just general questions. During the presentation, we'll take a few breaks to share knowledge-based questions with you. At those times a polling style feature will pop-up on your screen with a question and multiple choice answers. Select the response you believe is correct by clicking on the radio button next to your selection and then click Submit. Some people may not get the polling questions and this may be because you have your pop-up blocker on. So please take a moment now to disable your pop-up blocker, so you can answer the questions throughout the webinar. We've included several technical documents that describe how you can allow pop-up blockers based on the browser you're using. We have documents for Chrome, Firefox, Microsoft Edge, and Safari. And you can access these by clicking on the materials dropdown arrow on the left side of the screen. So, let's take a minute now and test that polling feature. So, here's your opportunity to ensure your pop-up blocker is not on, but you can receive the polling questions throughout the webinar. And it is a very simple question. Have you ever downloaded an IRS national webinar recording from our video portal? Very simple set of answers. A, for yes; B, for no; of course, C, where is that video portal? Go ahead. Take a moment. Hopefully everybody sees that pop-up with the polling question, click the radio button and select your answer. All right, and I'm just going to read this one more time just to make sure everybody has a chance to make sure they can get that working. Question read, have you ever downloaded an IRS national webinar recording from our video portal? A, for yes; B, for no; and C, you were wondering where our video portal is. All right, we'll give it just a few more seconds to let these responses come in. All right, let's go ahead and close the polling now. And I'll check in with my team and see how the majority of you responded. Okay, we'll just give them a minute and get back to you with that number. Okay, it looks like we have 65% that thought they have not downloaded an IRS national webinar recording from our video portal, so if you're not familiar with that resource, it is an excellent one, our video portal is located at www.irsvideos.gov. And you'll be able to find archived versions of webinars just like this one. All right, I hope you received the polling question and you were able to submit your answer. If not, now is the time to check your pop-up blocker and make sure you have it turned off. Again, we've included several technical documents that describe how you can allow pop-up blockers based on the browser you're using. Just click on that materials dropdown arrow on the left side of your screen and download your browser document.

Again, welcome and thank you all for joining us for today's webinar. Now, before we move along with our session, let me just make sure you're in the right place. Today's webinar is Form 1099-K Third Party Payment Network Transactions, Card and Electronic Payments. This webinar is scheduled for approximately 60 minutes from the top of the hour. And I'd like to introduce today's speaker, Kelly Stephenson. Kelly Stephenson was appointed as Program Manager of the 1099-K initiative in February 2023. She leads the daily cross agency 1099-K operations with the IRS. She began her financial career with ADP and joined IRS federal service as a Revenue Agent 16 years ago. She began her management track 10 years ago, taking on increasingly more responsibilities, including positions as a Territory Manager and Senior Operations advisor for the Director of Field Examination. So, with that, I'm going to turn it over to you, Kelly, to begin the presentation. If you're all set, the floor is yours. Hey, thank you, Michael. I appreciate that. Hello, everyone, my name is Kelly Stephenson, and thank you for joining us for today's webinar on Form 1099-K Third-Party Payment Network Transactions. Today's objectives are to provide you an overview of the Form 1099-K filing threshold for third party settlement organizations, or TPSOs; I'll provide information on the 2023 implementation delay, provide information on the planned 2024 $5,000 threshold, and provide you with resources to educate and help you prepare your clients for the 2024 filing season. And what we will cover includes friends and family transactions, or peer-to-peer transactions, and some definitions of terms. We'll talk about how to report Form 1099-K amounts on the tax return. Tell you what taxpayers should do if a Form 1099-K is incorrect, discuss some recordkeeping and how it will help file taxes accurately, and cover available IRS.gov resources and information to share with your clients. The previous 1099-K reporting threshold for third-party payment network transactions was over $20,000 and 200 transactions. The American Rescue Plan Act of 2021 lowered the reporting threshold to total gross payment of more than $600 for the year, regardless of the number of transactions for calendar years after December 31, 2021.

The law further clarified that the minimum reporting threshold for calendar years after 2021 apply only to payments settled through payment settlement entities, or PSEs, like popular payment apps and online marketplaces for the sale of goods or services, there is still no threshold for payment card transactions, which include credit, debit, and gift cards. The threshold change did not change the definition of reportable payments. The IRS announced that 2022 was a transition year, and on November 21, 2023, the IRS announced that 2023 will be another transition year to implement the new requirement. This means that for 2023, popular payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions instead of payments over $600. This was in response to feedback from taxpayers, industry, and stakeholders, and was intended to help reduce confusion and provide more time for taxpayers and stakeholders to prepare and understand the lower reporting threshold. Now, despite the delay, some taxpayers may still receive a Form 1099-K in January 2024. Backup withholding payments greater than $600 will also generate a Form 1099-K. The delay has no impact on the taxpayer's responsibility to timely and accurately report their income. Taxpayers must continue to report all income unless it's excluded by law. The Internal Revenue Code gives the IRS Commissioner broad discretion to administer the tax law. This delay is consistent with many others we've taken in the past like FATCA and ACA. The IRS is planning a $5,000 threshold for tax year 2024 as part of a phased-in approach to implement this $600 reporting threshold enacted under the American Rescue Plan. The IRS is still assessing if there will be a requirement for the number of transactions with the $5,000 reporting threshold. This phased-in approach will allow the agency to review its operational processes to better address taxpayer and stakeholder concerns. Our objective is to implement the laws that Congress passes with as little complication to taxpayers as possible. Now, it's important to restate anyone who's selling goods or services at a gain is expected to pay taxes on that income regardless of the threshold. Now, let's take a look at the actual form. Form 1099-K Payment Card and Third Party Network Transactions is an information return. Payment settlement entities are required to file this document with the IRS by February 28th of the year following the transactions, if they're filing on paper. If they're filing electronically, they must file Form 1099-K by the last day of March. Payment settlement entities must also furnish a copy of Form 1099-K to the taxpayer with the same information reported to the IRS. They must send payee or taxpayer copies to the taxpayer by January 31. Box 1a reports the gross amount of transactions. It is the total dollar amount of reportable payment transactions for each participating payee without any adjustment for credits, discount amounts, fees, refunded amounts, or any other adjustments to the gross amount. Now, this part can be confusing to taxpayers, so it's important to know that in the first or second quarter of 2024, there are plans to improve the form's instructions with this type of clarification. Box 4 is used to report backup withholding if required. Now, as a reminder, a 1099-K is required if this is $600 or more despite the delay. Boxes 5a through 5l are used to report the gross amount of reportable payment transactions for each month of the calendar year. Information returns increased compliance and taxpayers use this form to help them determine income to report on their tax returns. So, who typically receives a Form 1099-K? Taxpayers likely to receive a Form 1099-K are businesses, sole proprietors, self-employed individuals, gig workers such as rideshare or delivery drivers, anyone selling goods and services, particularly through online marketplaces or who receive payment through an app. Those who rent out properties through a payment platform, app, or website, and people with side jobs. For example, someone selling items at a holiday craft fair. There is no change to how money earned is taxed, but many more taxpayers could receive a Form 1099-K that should be used in combination with their books and records for preparing tax returns. For many taxpayers, 2023 or 2024, may be the first year they receive a form 1099-K and they may have questions when they come to you. IRS.gov/1099-K has been updated with information to help taxpayers, practitioners, and VITA tax volunteers. IRS.gov resources include updated content at the Understanding your Form 1099-K page and the Gig Economy Tax Center webpage, which has resources that will be helpful for taxpayers. The IRS continues to develop resources, including more FAQs and communication products. Friends and family transactions - Only payments from goods and services should be reported on a Form 1099-K. Money sent between family and friends received as a gift or for reimbursement is not required to be reported on a Form 1099-K, because it's not a payment for goods or services. For example, a payment app is not required to report money sent as a gift to a student for college expenses. A payment app is not required to report money sent to a friend for reimbursement of dinner or a trip. Payment app is not required to report any type of gift. These are all personal transactions and not transactions for goods or services. Form 1099-K should not be sent for these types of payments. Some individuals may receive a Form 1099-K for the sale of personal items. The sale of personal items is reportable on a Form 1099-K if taxpayers receive more than $20,000 and have more than 200 transactions. Examples could include selling a couch, a bike, or even gently use baby clothes. If a taxpayer receives a Form 1099-K that is incorrect or receives a Form 1099-K for a friend or family transaction, they can find guidance on IRS.gov/1099-K. IRS has updated guidance to direct taxpayers to report sales of personal items with offsetting adjustments on the Form 1040, Schedule 1. See the IRS.gov Understanding your Form 1099-K for additional information. So, let's talk a bit about those terms that I mentioned previously. A PSE can take two forms, a Merchant Acquiring Entity or a Third Party Settlement Organization, which is also the TPSO I referenced previously. Banks are an example of a PSE, also known as Merchant Acquiring Entity. We will talk some more about Third Party Settlement Organizations on the next slide. The term payment card includes debit cards, credit cards, and gift cards. These types of transactions or payments were not impacted by the American Rescue Plan Act threshold reduction. Reporting threshold has always been all transactions no matter the amount are reportable. Let's talk a little bit about a TPSO, which is really what most people are interested in. So, what is the actual definition of a TPSO? It's a central organization with a contractual obligation to make payments to participating payees generally a merchant or business of third party network transactions. The definition is certainly a mouthful. So, let me try to bring it down to more plain language. A TPSO is basically an online marketplace and digital payment app that are accessed online or on a smartphone as examples of TPSOs. These were impacted by the American Rescue Plan Act's threshold reduction. The new threshold is more than $600 and any number of transactions, where it was previously more than $20,000 and more than 200 transactions with delayed implementation for 2022 and 2023. We've given you a lot of information. So, how about we pause here for a polling question, Michael? Great idea, Kelly. So, audience, if you look to your screen, you should see a polling question. This is our first polling question and it reads, taxpayers likely to receive a Form 1099-K from a payment app are: A, sellers of goods and services or personal items; B, individuals earning money on a side hustle; C, businesses, sole proprietors, or self-employed; D, gig workers; or E, all of the above. So, which taxpayers are likely to receive a Form 1099-K from a payment app? Take a moment to read through the question, click the radio button that best answers the question. I'll give everyone a few more seconds to make your selection now. All right, let's stop the polling now, and give me one second while I check in the background and get the count. And let's share the correct answer on the next slide. So, the correct answer here was the all of the above. And I'm just getting the number 97% of you answered that question correctly. Excellent job, everybody. All right, Kelly, you're doing great. Passing it back to you. Thanks, Michael. Great job, everybody, answering that question. So next, let's talk about where do gig workers report. Gig workers often don't understand that they are by nature self-employed and subject to self-employment tax. Gig workers who receive a Form 1099-K generally will - their proceeds on Schedule C in combination with any other self-employment income received.

Their net earnings are subject to self-employment tax if $400 or more. We recommend that gig workers should consider the following for their taxes too. Increasing withholding from W-2 wage earnings to cover additional tax due and making estimated tax payments. Now, let's walk through an example of selling a personal item that might impact these individuals. Taxpayers who sell personal items and receive payment through an app could now receive a Form 1099-K. The item sold may be considered a capital asset. Taxpayers may have questions on how to report the information provided on their tax return. The sales price may be included in gross proceeds reported on Form 1099-K if the threshold is met. And they may have a gain or loss on the sale of personal capital or non-capital items. And it's generally the difference between the amount paid for the item, which is the purchase price or basis, and the amount received when they sell it, which is the sale price. So, you have the sale price minus purchase price equals either a gain or a loss. Losses on the sale of personal items are not deductible and gains are reportable. If the sale was of a capital asset, gains should be reported on Form 8949, Sales and Other Dispositions of Capital Assets, and Form 1040, Schedule D, Capital Gains and Losses. Publication 551, which is Basis of Assets, is available for guidance on this. So, let's run through an example of a gain. You buy a boat for $15,000. Something unavoidable comes up and you're forced to sell it for $20,000. You have a taxable gain of $5,000, which is the $20,000 sales price minus the $15,000 purchase price, which gives you your $5,000 gain. You might receive a Form 1099-K, but either way, the transaction is taxable and the $5,000 gain should be reported as income. Remember those forms we referenced earlier? The gain goes on Form 8949 and Schedule D. Now, let's cover when the sale is a loss. You bought a boat for $40,000. Unfortunately, you discover you get seasick and you have to sell it.

You sell it for $25,000. The buyer sent money to you through an app or a digital platform, you have a loss of $15,000. The $25,000 sales price minus the $40,000 purchase price equals a $15,000 loss. Now, regardless of whether you receive a 1099-K, the loss is not deductible because losses on personal use items are not deductible and there is no tax due, because it's a loss, not a gain.

Now, you have two options for reporting the loss. The first is Form 1040, Schedule 1, where you would use Lines 8z and 24z or Form 8949 and Form 1040, Schedule D. Let's look at the next few slides for specific reporting after we do another polling question. All right. Thank you, Kelly.

Audience, your second polling question should be popping up on your screen. And that polling question reads, taxpayers who receive a Form 1099-K for the sale of a personal capital asset at a gain should: Is it A, report the gain of capital asset using Form 8949 and Form 1040, Schedule D; option B, report the gain on Schedule C; C, do not report the gain; or D, none of these options.

This one might be a little trickier. Take a moment, reread the question, and then click the radio button that best answers the question. Now, I'll give you all just a few more seconds to make your selections on this one. Okay, we will close the polling now. And let's look to the next slide to see the correct answer here. All right. And the correct response was A, you report the gain of capital asset using Form 8949 and Form 1040, Schedule D. And checking in with the team, it looks like, all right, excellent work, 94% of you answered that correctly. Great job, everybody. Thanks for putting in your responses so quickly. All right, Kelly, I think it is back to you to discuss some specific reporting situation. Thanks, Michael. All right, remember you sold the boat for $25,000 in the previous example. Let's walk through reporting that loss. We've reported on Form 1040, Schedule 1, Part I Line 8z, Other income. List the type and amount, which is your Form 1099-K personal use item sold at a loss for $25,000. On the same Form 1040, Schedule 1, Part II, which is Line 24z, under Other Adjustments, we're going to list the type and amount, Form 1099-K personal use items sold at a loss of $25,000, which will net zero out the 1099-K given to you for $25,000. Now, if you want to report it on Schedule D, you would start with Form 8949, and then throw the $25,000 in Column D as proceeds, enter the $40,000 in Column E as cost or your basis, enter L in Column F, enter $15,000 in Column G as the adjustment amount, and it results in a zero gain or loss in Column H. Now, I usually suggest using Schedule D instead of Schedule 1 if your client has other items to report on Schedule D. Otherwise, Schedule 1 is just a simple option for reporting. So, who issues the Form 1099-K if there are multiple payment settlement entities or PSEs? Many online transactions are handled by multiple payment settlement entities, such as an online marketplace where the goods or services are sold, and the payment app who distributes the funds to the seller. If there are multiple PSEs, the one who makes the payment to the seller will generally be required to file Form 1099-K. So, for example, John sold all of his furniture through an online marketplace because he was moving. John accepted a new job across the country, and he has a big house and decided to sell absolutely everything through an online marketplace. John received more than $20,000 and there were more than 200 transactions. The payments were distributed to John via a payment app. Because the payment app distributed the funds to John, the payment app would generally be required to furnish John with a Form 1099-K, which will also be filed with the IRS. If your client receives payments for selling goods or services through multiple platforms, your client may receive one Form 1099-K, from each platform. Hey, Michael, how about another polling question? Sounds good, Kelly. Audience, here is our third polling question.

And this question reads, if you received a Form 1099-K for the sale of a personal item at a loss, you should that: A, report the entire loss of the personal item on Schedule C; B, zero out the reported gross income, so you don't pay taxes on it, you would use Form 1040, Schedule 1, or Form 8949 and Form 1040, Schedule D; option C, simply ignore it; or D, none of these options. Again, these are a little bit more technical, but we'll give you a little bit of extra time to read through these. Take a moment to click the radio button that comes up with the best answer for the question. And I'll give everyone a few more seconds to make those selections. All right, looks like we will stop the polling now, and we'll share the correct answer on the next slide. Okay, as Kelly [ph] had discussed with us, the correct response here is B, zero out the reported gross income, so you don't pay taxes on it and you can use Form 1040, Schedule 1 or Form 8949 and Form 1040, Schedule D. Let's see how we did. Okay, 82% of you answered that one correctly. So, pretty good.

Good job. But it does get a little more technical at this point. So, Kelly, thanks for all the information you're providing so far. And I will turn it back to you. Thanks, Michael. Let's talk a little bit about recordkeeping. So, what should you do if your client receives a Form 1099-K?

Have your client review payment activities? Records can show whether your client has a profit or a loss and help prepare you and your client to accurately file a tax return when it comes time. Have your client identify sources of income or gross proceeds? Some examples, gig work, food delivery service, online marketplace sales, online rental or vacation property income, rideshare app driver, provides professional or creative services, et cetera. Also, sale of a personal asset, track gross proceeds of sales for each item. Ask for client to track deductible expenses throughout the year, unless your client records expenses when they occur, your client may forget when the tax return is prepared. There are several publications that can assist with determining qualifying expenses. Pub. 463 is for Travel, Gift, and Car Expenses. Pub. 535 is for Business Expenses. Pub.

583 is for Starting a Business and Keeping Records. Pub. 527 covers Residential Rental Property, including Vacation Homes. And we suggest reviewing withholding and estimated tax options with your client. Gig workers may require estimated tax payments. And it's important to note that gig workers and content creators have fluctuating income. They may make a large amount of money this month and no money next month. Form W-4 can be used to request additional withholding from gross proceeds received to avoid making estimated tax payments. Increased withholding from a wage earning position as an employee may help avoid the need to make estimated tax payments. Have your client keep track of basis in property. Did your client sell concert tickets? They should keep a copy of the original purchase receipt to help determine if there's a gain or a loss on the sale of a personal use asset. And then it's time to prepare the tax return. Your client's good record keeping throughout the year will help your client provide accurate income and expense amounts for the tax return for you to prepare. What should you do if there's an issue with a 1099-K receipt?

If your client receives a Form 1099-K by mistake or the information is incorrect, you can do the following. Contact the issuer of the Form 1099-K immediately to request a correction. The issuer's name appears in the upper left hand corner on the form along with their phone number. But it's important to note, please don't wait to file their taxes. If your client cannot get a corrected Form 1099-K, then report it on Form 1040, Schedule 1, Part I Line 8z. You can list the dollar amount received for line 8z as Other Income, Form 1099-K Received in Error. Then list the dollar amount received for Part II, Line 24z as Other Adjustment, Form 1099-K Received in Error. This will zero out. Hey, Michael, do we have another polling question? We sure do. Audience, here is our fourth polling question. And this should be coming up on your screen now. This one is pretty technical. I'm not going to read the whole question to you, but I'm hoping that you see it on your screen. The question reads, if you receive an incorrect Form 1099-K, you cannot get it corrected from the issuer, what should you do? A, you ignore it; B, you report the incorrect dollar amount from Form 1099-K on Form 1040, Schedule 1 as follows: I'll let you read that part from your screen, C, you report the error as a capital gain; or D, report the error on Schedule C, profit or loss from a business. I'll give you a few minutes, just to make sure you have time to read the whole question. We'll take a moment now, click the radio button that best answers the question.

And I'll give everyone a few more seconds to make those selections. All right, we're going to stop the polling now. And let's share the correct answer on the next slide. And we will get the number of correct answers in just a second. But if you had not guessed already, the answer was B, you would report the incorrect dollar amount from Form 1099-K on Form 1040 as seen on your screen.

Okay, it looks like 97% of you answered that one correctly. I was hoping you would see a high number like that. Great job, everybody. Thanks for sticking with us and making sure to answer those poll questions. All right, Kelly, I believe you have some additional resource information to share with everyone. I do. Thank you, Michael. There's a wealth of resources on the IRS website, and we will continue to update our content as we develop further guidance. The available resources include information to help with Understanding the Form 1099-K, in addition to the Form 1099-K FAQs, which are being updated, and the Gig Economy Tax Center. There are also other helpful topics like Recordkeeping and how to make estimated tax payments. There are also products you can post on your website or print and share to help educate your clients. The IRS will continue to deliver communications and outreach to help taxpayers understand the threshold change and their income tax responsibility. You can help us in this effort. If you have a website, you can include a link to IRS.gov/Form1099K or add this QR code that's on the screen, which will direct your customers to IRS.gov for more information. You can also stay in touch with us through a variety of IRS social media channels we have available to keep you up to date with your activity. You can like or share our messages and videos on your website or social media platform to increase the audience and our messages reach; www.irs.gov/socialmedia will give you a comprehensive list of every social media account the IRS uses. You can also tune into the IRS YouTube channels. There are four channels in total to watch short practical videos in English, Spanish, Chinese, and ASL. Twitter or X, IRS tweets include tax-related announcements for individuals, businesses, tax professionals, and people looking for IRS jobs. This platform is a good way to stay up to speed on the latest scam alerts, too. There are eight IRS Twitter or X accounts available. Facebook. The IRS Facebook pages are in English and Spanish and post useful information, event announcements, and tips for taxpayers and tax professionals. There are four pages you can follow there. On Instagram, the IRS shares taxpayer-friendly information, including tax law changes, the latest tax scam information, and helpful hints to combat tax-related identity theft. Updates are periodically shared in Spanish and other languages. There is one page to follow on Instagram. On LinkedIn, the IRS page posts agency update, tax information, and job announcement. There are also e-news subscriptions that come straight to your email inbox and can be customized to individual preferences. Now back to you, Michael. All right, thank you so much, Kelly. All right, it looks like next we will be moving into our Q&A session. So, audience, earlier I mentioned we want to know what questions you have about Form 1099-K for our presenter. Kelly is staying with us to answer your questions. One thing we may not have time to answer all of the questions coming in, but we do greatly appreciate all of those from you. So please submit those as we go through these or at any time throughout the end of the webinar. So, if you haven't input your questions already, there is still time. Go ahead and click on the dropdown arrow next to the Ask Question field, and then simply type in your question and make sure to click Send to submit the question. All right, let's get started. So, we can get to as many questions as possible. And Kelly, as I go through these, if there's something that comes through from the audience that you're not able to answer on a national webinar, feel free to let me know, no need to provide specific technical information that should be shared at this time. Just let me know and we'll pass to the next one. But let's see, we'll start with one that is coming in pretty commonly. We hear this a lot. And so, the question is pretty general, how does the IRS have the authority to delay the 1099-K rule? Well, you're right, Michael. We do get this question a lot. The Internal Revenue Code gives the IRS Commissioner discretion to administer the tax law. We've done this in the past where we've delayed implementation of laws in the interest of tax administration. For example, we delayed implementation of the Employer Shared Responsibility provision under Section 4980H for 1 year. Likewise, we had to delay the companion information reporting provision under Section 6056.

We also provided penalty relief for several years under 6055 and 6056 for the time to file. And in the early years, if filers demonstrate good faith efforts to file accurately. Additionally, the IRS-related withholding under the Foreign Account Tax Compliance Act, which is FATCA, and certain other FATCA timelines. Okay, okay. Good to know. Now, here's another kind of a tougher one, and don't take this wrong way. The decision for the IRS to delay the 1099-K implementation, and I believe last year and this year, it came late in the year. So the question that we're seeing a lot is, why did it take so long to make the decision to delay? It's an understandable question.

Well, throughout the year, the IRS had many taxpayers, tax professionals, industry groups on other types of engagements. It just became increasingly clear that we needed additional time to further refine our approach. And we at the IRS had concerns about creating confusion and unnecessary reporting for taxpayers. And we wanted to avoid that, as well as the impact it would have on the third party groups, the tax professionals, and others in the tax community. So, it just seems like the right choice. Okay. All right. Thanks for that. Let's see, the next question is, what, if any, are the proposed changes for the Form 1040? Yes. So, again, after all of the external stakeholder engagements and input that we've received this year, we are considering changes to the 1040 and the related schedules. So that when the full $600 threshold is implemented, taxpayers will be able to more easily report the amounts on the form when they file their taxes. This will be especially important for those who sold personal items at a loss or otherwise don't have any kind of a tax obligation from, say, a friends and family transaction. Okay, good to know. Let's see here. All right, next question, and again, if you're not able to provide specific dates, just general timelines is fine, or whatever you're able to provide with us on this. So, this one is, when will the IRS implement the $600 threshold? Good question. Well, we're committed to a smooth transition and minimizing confusion for taxpayers. So, we're taking this phased-in approach, because we think it's the right approach to implementing the law efficiently and effectively. The IRS will evaluate the planned threshold of the $5,000 as it's implemented in 2025, while we continue to work on updating our internal operational processes. Okay. Let's see. And then we have a number of questions coming in from the audience. So, thank you everybody, please keep those coming. We'll try to get to some of those more specific ones. Okay, here's more of a general one for you, Kelly.

What are the industry groups that the IRS is meeting with or has met with? Sure, that's a good question. So, throughout the year and continuing into next year, we heard from taxpayers, tax professionals, industry groups, payment processors, and others, which also included the filing industry. So good groups. All right, lots of great. All right, let me find another question here.

All right, this question reads, this is kind of a long one. So, I'll try to make this little brief. A question reads, how do you report the sale of personal property that was purchased years ago, and you no longer know the purchase price, but it was sold less than the original purchase price? We know it was a loss, but you do not recall the correct, the original purchase price.

This is a good question. It's one that we get often in relation to basis. I would like to say that there are some good examples on IRS.gov.com/understandingyour 1099K that refer back to this.

If you don't know, if you don't keep the original records for a personal asset, say, a couch that you purchased that you are positive, you've now sold at a loss. We encourage you to look into it a number of different ways, you can Google to see if you can locate some sort of historical price.

You can go on to a website and search for similar items to see what the purchase price is. You can take a look at perhaps your credit card receipt or debit card receipt, those statements, and see if you can recreate the price that way. Those are our best recommendations for recreating an original purchase price or basis on and documenting the sale of a personal item at a loss. Okay, good answer. Thanks for that, Kelly. And, yeah, it just makes me realize how the importance of record keeping longer than you might have thought. Yeah, very good information. Okay, this next question, I do have the paraphrase one of these. So, this next question reads, although the threshold amount for implementation has been delayed, are there still situations when a 1099-K will be issued using that $600 threshold? Good question. Yes, it is still possible that taxpayers may receive a 1099-K utilizing the $600 threshold. That's why it's important to keep good books and records, as you mentioned, Michael. And then, determine whether the item was sold, for goods and services at a loss or a gain. And then, determine whether it's best to report that on the 1040 Schedule 1, Lines 8z and 24z or the Form 8949 and Schedule D on the 1040. Okay. All right. Let's see. I am going to skip one, move to another one. Let's see. Okay, this question reads, how do we handle a 1099-K that includes both business and personal transaction? Great question. Sorry, go ahead, Michael. Oh, I was just going to say, these will get a little bit complicated as I am reading directly from our audiences' questions, so I do kind of have to rephrase this sometimes just to simplify it. But if at any time it's unclear, please ask me to repeat the question, I am happy to do so. I appreciate that, Michael. Thank you. It is very possible that there could be a commingling of business and personal transactions if the individual doesn't have separate accounts for business and personal. So, first, I would start with encouraging good record keeping for your clients, so that they understand which of their transactions are business and which are personal.

The second thing I would recommend is that they create separate accounts, which make separating those transactions incredibly easy. Utilize just the business account for their transactions and then their personal account which for those that are friends and family transactions peer to peer which are non-taxable, those should not generate a Form 1099-K out of the personal account for friends and family transactions, unless they're marked as for goods and services which is a possibility. So that's my recommendation is to document that through recordkeeping and utilize the two separate accounts. Now, if for some unforeseeable reason that the client did not do either of those. Then, you're going to need to go back with your client and advise them to look through each individual transaction to see if they can determine which are business and which are personal. In which case the business transactions will likely be reported on Schedule C subject to self-employment tax. And then the personal transaction, you can report them on 1040 Schedule 1, Lines 8z and 24z to net zero out those personal transactions. Or if you're already preparing Schedule D and you choose to report it on Form 8949 and Schedule D, you can do that as well for those personal transactions. I hope that answers the question. Yes, I think that definitely covers it. So, thanks for answering that. And just for anybody wondering, I know we are kind of covering technical procedures here. If you're not taking active notes and maybe hard to remember all of this, just a quick reminder, all of these webinars, and this one specifically will be recorded and posted on www.irsvideos.gov. And you can even read this transcript later. So, these are great questions. Thanks to our audience. All right, let's see if we can get another one in here. All right. Okay, this one might be similar to one of your prior answers, but we're getting a lot that are related to this. So, the question reads, what should we as tax preparers do if our clients do not know their original purchase price of a personal item that they sold? Yes. I think we had something similar a few questions ago. My recommendation is to do the best that you can to recreate the basis. For example, there are examples on IRS.gov/1099K, Understanding Your 1099K page that can help. But some of the things that we recommend are searching historical purchase prices to see if you can recreate the price that way, searching through credit card statements or debit card statements, as well as searching Google to see if you can find something similar with the price and back into it that way currently. And, therefore, that should help you determine whether you have a gain or a loss. Okay, great. All right, good option. Thank you. All right, next question. All right, this one is a little bit longer as well. This question reads, will you as a taxpayer, will the taxpayer receive a 1099-K for every person that pays them more than $600? Or will it be one 1099-K with all the reportable income included? That is a good question. Oh, go ahead, Michael.

Sorry. Oh, I was going to say that there is the name of a third party settlement organization in that question, but I won't read that on Okay, I appreciate that. The answer to the question is, they will receive a 1099-K from each payment platform. So, the Third Party Settlement Organization, or TPSO, that paid them, it will be one per TPSO or platform as long as it is above the threshold. The threshold is not set on per person payments, it's aggregate per platform. So, say, your client received $28,000 from each of three different platforms, and they would receive 1099-K from each of those three platforms, so three Form 1099-K. I hope that answers the question.

I think it does. That's excellent. All right, Kelly. Okay, I'm getting the word. We are wrapping up our questions. That is the end of our time for this. So, thank you so much for staying on and answering those live questions with our audience. Before we leave, do you have any key points that you want our attendees to remember from today's webinar. Oh, absolutely. Thanks for asking. The key takeaways from today's webinar are that the American Rescue Plan Act of 2021 lowered the reporting threshold to total gross payments of more than $600 for the year, regardless of the number of transactions for calendar years after December 31, 2021. The law further clarified that the minimum reporting threshold for calendar years after 2021 apply only to payments settled through payment settlement entities like payment apps and online marketplaces for the sale of goods or services. There is still no threshold for payment card transactions. The threshold change did not change the definition of reportable payments. Personal transactions between friends and family for gifts and reimbursements are not reportable payments. The IRS announced on November 21, 2023 that 2023 will be another transition year to implement the new requirement. This means that for 2023 popular payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions instead of payments over $600. The IRS is planning a $5,000 threshold for tax year 2024 as part of a phased-in approach to implement the $600 reporting threshold enacted under the American Rescue Plan. Now, despite the delay, some taxpayers may still receive a Form 1099-K in January of 2024. The delay has no impact on the taxpayer's responsibility to timely and accurately report their income. Taxpayers must continue to report all income unless it's excluded by law. But it's important to restate, anyone who is selling goods or services out of gain is expected to pay taxes on that income regardless of the threshold. And IRS.gov has an abundance of information available and is a great resource for you and your clients. Audience, that's my time for today, and I thank you for your participation.

And Michael, back to you. All right. Thank you, Kelly. Great information today, and thanks to you and our audience for all the engagement, all your questions, and a wonderful webinar. Audience, we are holding a 2-hour ethics webinar coming up next Tuesday, December 19th. And to register for the ethics webinar or any of our upcoming webinars, you can visit us at IRS.gov and do a keyword search for webinars, and select the link for webinars for tax practitioners or webinars for small businesses. And when appropriate, we will be offering certificates of completion and continuing education credits for those upcoming webinars. We invite you to visit our video portal that's at www.irsvideos.gov. You can view archived versions of all of our webinars. Now, again, continuing education credits or the certificates of completion that you receive for these webinars, those are not offered if you view an archived version of any of our webinars on the IRS video portal.

Another big thank you to Kelly Stephenson for a great webinar and sharing her expertise today. And I also want to thank you all of our attendees for attending today's webinar, Form 1099-K Third Party Payment Network Transactions, Card and Electronic Payments. If you attended today's webinar for at least 50 minutes after the official start time, you will receive a certificate of completion that you can use with your credentialing organization for one possible CE or continuing education credit. Again, the time we spent chatting before the webinar started does not count towards those 50 minutes. If you're eligible for continuing education from the IRS and you registered with your valid PTIN, your credit will be posted in your PTIN account. If you are eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account as well. If you qualify, but you haven't received your certificate and/or credit by December 31, 2023, please email us at cl.sl.web.conference.team@irs.gov. And you'll see that email address on this slide. If you're interested in finding out who your local stakeholder liaison is, you can send an email using that address and we'll send you that information as well. We would appreciate it if you would take a few minutes to complete a short evaluation before you exit. If you'd like to have more sessions like this one, please let us know.

If you have thoughts on how we can make these better, let us know about it as well. And if you have any requests for future webinar topics or pertinent information you'd like to see in an IRS Fact Sheet, a Tax Tip, or an FAQ on IRS.gov, then please include your suggestions in the comment section of the survey. Just click the survey button on the right side of your screen to begin. And if it doesn't come up, check to make sure you disable that pop-up blocker. It's been a pleasure to be here with you. And on behalf of the Internal Revenue Service and Kelly, our speaker, we would like to thank you for attending today's webinar once again. It's important for the IRS to stay connected with the tax professional community, individual taxpayers, industry organizations, along with federal, state, and local government organizations, you make our job a lot easier by sharing the information that allows for proper tax reporting. Thanks again for your time and attendance, and we wish you much success in your business or practice. You may exit the webinar at this time.